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on Payment Systems and Financial Technology |
| By: | Rosengard, Jay (Harvard University) |
| Abstract: | A powerful tool to achieve equitable development is promotion of economic empowerment for marginalized citizens by increasing formal financial services access and utilization. The provision of these services via mobile phones has shown great promise in overcoming geographic, demographic, and institutional constraints to financial inclusion, especially in Africa and led by the mobile banking revolution in Kenya. This is exemplified by the extraordinary success since 2007 of Safaricom's M-PESA, a mobile phone-based money transfer, payment, and banking service: as of June 2015, Safaricom had more than 22 million M-PESA subscribers served by over 90,000 M-PESA agents. The confluence of several factors have contributed to M-PESA's success, including Kenya's political and economic context, demographics, telecommunications sector structure, lack of affordable consumer options, and enabling regulatory policies. Equally important have been Safaricom's internal astute management and marketing of M-PESA. But M-PESA is now facing a strong new rival in Airtel Money, offered by Equity Bank, Kenya's third largest bank. Now two different models for mobile financial services are competing vigorously in Kenya: Safaricom, an example of telecom-led mobile banking and Equity Bank, an example of bank-led mobile banking. There are three key challenges in Kenya to further promotion of financial inclusion via development of mobile financial services: facilitation of increased competition; transformation of non-digital microfinance institutions; and enactment of greater consumer protection. Where Kenya's success factors might be present, many of Kenya's lessons can be adapted. Where conditions are significantly different, the challenge becomes how best to nurture home-grown innovative solutions to address specific local constraints. |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:16-032&r=pay |
| By: | Grégoire Bothorel (PRISM - Pôle de recherche interdisciplinaire en sciences du management - UP1 - Université Panthéon-Sorbonne, numberly (1000mercis Group) - numberly (1000mercis Group) - numberly (1000mercis Group)); Régine Vanheems (Centre de Recherche Magellan - Université Jean Moulin - Lyon III - Institut d'Administration des Entreprises (IAE) - Lyon); Anne Guérin (numberly (1000mercis Group) - numberly (1000mercis Group) - numberly (1000mercis Group)) |
| Abstract: | Many firms have implemented a customer-value based segmentation to improve the efficiency of MARCOM campaigns as part of their long term customer relationship strategies (Kumar 2010, Thomas et al. 2005). If distribution channel addition may increase the intrinsic customer value (Kumar 2005, Rangaswamy 2005) in a US context as well as in a French context (Vanheems 2009), few studies have been conducted about the impact of adding a new communication channel during the same buying journey. As the number of devices enabling to communicate with consumers increases, the goal of this research is to understand whether combining web and mobile communication channels for a same journey is more efficient than using a single web channel, monitoring the promotional pressure. Due to consumer reactance at higher levels of communication, Godfrey et al. (2011) have shown that channel interaction effects could lead to diminishing returns. The issue of this paper is to evaluate if the same result can be observed in case of omni-channel strategy involving a mobile channel (Verhoef et al. 2015). More precisely the major contribution of our paper is to extend current knowledge by measuring the impact of combining a web channel (email) with a mobile one (SMS). The measure will be made on a large population of 304,410 individuals from a French click & mortar retailer’s customer database and with an unprecedented richness of data thanks to individual variables regarding customer purchases, browsing behavior, customer historical reaction to brand communications and customer distance to closest store. Different questions can be raised: (1) Can combining web and mobile channels within a communication strategy result in an increase in customer count and spend both offline and online? (2) How can we explain this impact in terms of segment specificity such as: i) FRAT segmentation, ii) Browsing data: mobile versus desktop readers, iii) Customer historical reaction to brand emails, iv) Customer distance to closest store? The aim of this research is then: (1) to evaluate, at equal effective pressure, the impact of adding a mobile communication channel on customer buying behavior. (2) to find out whether given customer segments reveal higher value thanks to multichannel targeting. (3) to explore and advance factors explaining the differential impact of multichannel versus single channel communication on purchase behavior. To comply with our focus on customer value unlocking, we measure increments provided by multichannel targeting compared to single channel targeting. As recommended by Dinner, van Heerde, Neslin (2014), the four following outcomes of interest have been retained: i) Customer count offline, ii) Customer spend offline, iii) Customer count online and iv) Customer spend online A field experiment has been carried out to measure and understand the differential impact of push multichannel communication sequences. Five populations, split randomly, have been exposed to a specific channel strategy. The first one was assimilated to a control group as exposed to single channel targeting by email only. Four multichannel test groups have been implemented; three of them were targeted with three messages but with different sequences mixing email and SMS. The fourth group was intentionally slightly over-pressured with four messages. The analysis methodology consists in calculating, for each population these four dependent variables and measure a “multichannel lift”. This lift analysis will be done with the customer-level data exposed above. Very first results advance significant insights. No impact has been observed on brands’ heaviest customers, which is counterintuitive in a FRAT-based targeting framework. Combining mobile and web channels results in a 40% lift in customer count on non-reactive to email customers, highlighting that inactive customers on one channel can still be active on a second channel. Finally, desktop email readers are more likely to purchase when targeted via mobile than mobile readers are. This research enables a new understanding for academia in the field of consumer response to multimedia communications as well as guidelines for practitioners about differentiated segments sensitivity, to refine their multichannel targeting strategies. Due to space limitations, underlying explanations are not presented here but theoretical propositions will be discussed in a full paper. |
| Keywords: | omni-channel communication, synergy, uplift, incrementality, customer value, communication omni-canal, incrémentalité, synergie,valeur client |
| Date: | 2015–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01357088&r=pay |
| By: | Athey, Susan (Stanford University); Parashkevov, Ivo (Charlie Finance); Sarukkai, Vishnu (Stanford University); Xia, Jing (Cornerstone Research) |
| Abstract: | This paper develops a model of user adoption and use of virtual currency (such as Bitcoin), and focusing on the dynamics of adoption in the presence of frictions arising from exchange rate uncertainty. The theoretical model can be used to analyze how market fundamentals determine the exchange rate of fiat currency to Bitcoin. Empirical evidence from Bitcoin prices and utilization provides mixed evidence about the ability of the model to explain prices. Further analysis of the history of all individual transactions on Bitcoin's public ledger establishes patterns of adoption and utilization across user types, transaction type, and geography. We show that as of mid-2015, active usage was not growing quickly, and that investors and infrequent users held the majority of Bitcoins. We document the extent to which the attributes of the anonymous users of Bitcoin can be inferred through their behavior, and we find that users who engage in illegal activity are more likely to try to protect their financial privacy. |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3469&r=pay |
| By: | De Simone, Lisa (Stanford University); Mills, Lillian F. (University of TX); Stomberg, Bridget (University of GA) |
| Abstract: | We develop and validate a firm-level measure of cross-jurisdictional income shifting and then test whether "income mobile" firms incur more negative IRS audit outcomes. Results suggest income mobile firms are no more likely to be audited than other multinational entities (MNEs), but they are more likely to receive a proposed deficiency from the IRS and to have a greater proportion of their originally claimed tax benefits challenged upon audit. At the conclusion of the exam, appeals and counsel progress, income mobile firms lose a greater portion of their claimed tax savings. However, because income mobile firms are better able to exploit opportunities to minimize U.S. taxes, their total U.S. taxes paid as a percentage of pre-tax income remains lower than other MNEs despite their more negative audit outcomes. Our contribution is using confidential IRS tax return data to inform the debate over U.S. tax outcomes for income mobile firms. |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3447&r=pay |
| By: | Wilko Bolt; Maarten van Oordt |
| Abstract: | This paper develops an economic framework to analyze the exchange rate of virtual currency. Three components are important. First, the current use of virtual currency to make payments. Second, the decision of forward-looking investors to buy virtual currency (thereby effectively regulating its supply). Third, the elements that jointly drive future consumer adoption and merchant acceptance of virtual currency. The model predicts that, as virtual currency becomes more established, the exchange rate will become less sensitive to the impact of shocks to speculators' beliefs. This undermines the notion that excessive exchange rate volatility will prohibit widespread use of virtual currency. |
| Keywords: | virtual currencies; exchange rates; payment systems; speculation; bitcoin |
| JEL: | E42 E51 F31 G1 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:521&r=pay |
| By: | Max Nathan; Anna Rosso |
| Abstract: | Governments around the world want to develop their ICT industries. Researchers and policymakers thus need a clear picture of digital businesses, but conventional datasets and typologies tend to lag real-world change. We use innovative ‘big data’ resources to perform an alternative analysis for all active companies in the UK, focusing on ICT-producing firms. Exploiting a combination of observed and modelled variables, we develop a novel ‘sector-product’ approach and use text mining to provide further detail on key sector-product cells. We find that the ICT production space is around 42% larger than SIC-based estimates, with around 70,000 more companies. We also find ICT employment shares over double the conventional estimates, although this result is more speculative. Our findings are robust to various scope, selection and sample construction challenges. We use our experiences to reflect on the broader pros and cons of frontier data use. |
| Keywords: | Big Data; Text mining; ICTs; Digital economy; Industrial policy; Firm-level analysis |
| JEL: | C81 L63 L86 O38 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:65211&r=pay |
| By: | Reinhart, Carmen (Harvard University); Trebesch, Christoph (University of Munich) |
| Abstract: | A sketch of the International Monetary Fund's 70-year history reveals an institution that has reinvented itself over time along multiple dimensions. This history is primarily consistent with a "demand driven" theory of institutional change, as the needs of its clients and the type of crisis changed substantially over time. Some deceptively "new" IMF activities are not entirely new. Before emerging market economies dominated IMF programs, advanced economies were its earliest (and largest) clients through the 1970s. While currency problems were the dominant trigger of IMF involvement in the earlier decades, banking crises and sovereign defaults became they key focus since the 1980s. Around this time, the IMF shifted from providing relatively brief (and comparatively modest) balance-of-payments support in the era of fixed exchange rates to coping with more chronic debt sustainability problems that emerged with force in the developing nations and now migrated to advanced ones. As a consequence, the IMF has engaged in "serial lending", with programs often spanning decades. Moreover, the institution faces a growing risk of lending into insolvency, most widespread among low income countries in chronic arrears to the official sector, but most evident in the case of Greece since 2010. We conclude that these practices impair the IMF's role as an international lender of last resort. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:15-077&r=pay |
| By: | Burcu Ozcan (Department of Economics, Firat University, Elazig, Turkey); Hiranya Nath (Department of Economics and International Business, Sam Houston State University) |
| Abstract: | This study analyzes the impacts of information and communication technology (ICT) on international trade between Turkey and its trading partners. Based on an extended panel gravity model, the effects of four ICT indices on Turkish bilateral exports and imports are examined with static and dynamic panel data models for the period 2000-2014. The sample includes 35 countries that import Turkish goods and 34 countries that export goods to Turkey. The results indicate that ICT has positive and significant impacts on both Turkish import and export volumes. Additionally, ICT has a larger effect on imports than on exports. Among ICT indices, ICT access has the largest effect on exports while ICT skills have the strongest impact on imports. In contrast, ICT use has the least impact on both Turkish exports and imports. These results are robust to alternative specifications and estimation methods. Based on these results, some policy implications can be derived. For instance, Turkey may develop strategic trading partnerships with countries that have high levels of ICT endowments, in order to increase its overall trade. |
| Keywords: | : Information and Communication Technology; international trade; trade costs; gravity model; panel data models |
| JEL: | F10 F14 O30 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:shs:wpaper:1609&r=pay |